IBM United Kingdom Pensions Trust Ltd v Metcalfe & Ors

The court has jurisdiction under section 51 of the Senior Courts Act 1981 to make a prospective costs order for a beneficiary involved in trust litigation, even where that beneficiary is not formally appointed as a representative beneficiary. The jurisdiction is constrained by established principles, but must be exercised to achieve fairness and justice. A technical absence of representative status does not justify discharging an agreed costs order where the beneficiary’s role was intended to protect the interests of the beneficiary class. Costs may cover monitoring proceedings, sharing relevant information and supplementing the trustee’s case, but not duplicating the trustee’s work or pursuing unrelated issues. Where common legal representation is used, a strict division of costs may be unnecessary. Representation by two counsel is permissible, subject to justification and notice to the opposing party.

The claimant trustee sought directions in connected proceedings concerning the IBM Pension Plan. Under a consent order made by Newey J, the trustee was authorised to bring substantive rectification and related claims, while George Metcalfe was joined as a defendant with protection for costs incurred in monitoring the proceedings and supplementing the trustee’s case.

IBM applied to discharge that costs protection on the ground that Mr Metcalfe had not been appointed as a representative beneficiary under CPR 19.7. Alternatively, IBM sought a costs cap. The issues were whether the court had jurisdiction to make the agreed prospective costs order without a representative appointment, whether the absence of such an appointment justified discharge, and the proper scope and practical limits of the costs protection.

1. The discharge application was dismissed. The court had jurisdiction under section 51 of the Senior Courts Act 1981 to make a prospective costs order in favour of Mr Metcalfe even though the trustee, rather than he, was intended to be appointed as representative beneficiary. The jurisdiction was constrained by the principles in Re Buckton and McDonald v Horn, but remained a statutory jurisdiction to be exercised to achieve fairness and justice.

2. The absence of a formal representation order did not amount to a sufficient change of circumstances. Mr Metcalfe’s agreed role was limited, but it was to be performed on behalf of the scheme members and beneficiaries rather than solely for himself. Treating the technical absence of an appointment as decisive would place form above substance. A representation order could also be made at a later stage, when the court was satisfied that the interests of the class had been fully aired.

3. The court did not need to decide whether it would have imposed the same order against IBM’s opposition. The parties had agreed the consent order, so the application was concerned with whether the order should be discharged for the future. IBM bore the burden of showing a change of circumstances justifying discharge, and had failed to do so.

4. The costs order covered monitoring the C Plan proceedings so as to obtain and share information relevant to the Project Waltz proceedings, and supplementing, but not duplicating, the trustee’s case. It did not authorise work directed solely to strengthening the Project Waltz case or questioning irrelevant to the C Plan claims. Nevertheless, because the same legal team represented Mr Metcalfe and the Project Waltz defendants, a strict allocation between the proceedings was unnecessary while the combined representation continued.

5. The court declined to impose a detailed costs cap at that stage. Mr Metcalfe was entitled to representation by at least one counsel and an existing solicitor member of the team. Attendance by both counsel was not prohibited, but IBM was to be informed in advance and the decision justified. IBM could return to court if it wished to challenge that decision.

First-instance decision. The judgment records that the substantive proceedings arose under a consent order made by Newey J in the earlier Beddoe proceedings.